Economy will grow between 6.1-6.5 percent: CII

New Delhi, May 3 (IANS) The Indian economy is expected to grow by 6.1-6.5 percent during 2009-10 owing to high growth in key sectors like agriculture and services, according to an industry lobby study. “We are factoring in GDP (gross domestic product) growth of 6.1-6.5 percent in 2009-10, based on sectoral growth rates of 2.8-3 percent, 5-5.5 percent and 7.5-8 percent, respectively for agriculture, industry and services,” the report by the Confederation of Indian Industry (CII) said.

According to the advanced estimate figures of the Central Statistical Organisation, the economy grew by 7.1 percent in 2008-09 after the expansion rate dipped to 5.3 percent in the third quarter.

The CII said factors like decline in interest rates, moderation in prices of food and fuel and reduction in excise duty and service tax had helped the economy improve.

On the economic performance last fiscal, the report said food grain production stood at 227.9 million tonnes, short of the targeted 233 million tonnes, while industrial growth decelerated to 2.8 percent during April-February 2008-09 from 8.8 percent in the like period the year before.

“The drivers of economic growth have to come from domestic sources. The government therefore needs to maintain higher spending, especially in the creation of public assets. Monetary policy, in turn, needs to be supportive,” the chamber said.

The report — which analysed the financial performance of 324 companies (173 in the manufacturing and 151 in the services sector) during the quarter ended March 31, 2009 — said there was a sharp fall in the sales of these companies.

The net sales growth of these companies dropped to 8.7 percent in January-March this year from 23.7 percent in the like period last year.

India’s merchandise exports last fiscal grew 3.4 percent to $168.7 billion from $163.13 billion in 2007-08, but fell short of the target of $200 billion.

The global financial turmoil also resulted in a sharp decline in capital inflows into India. During April-December 2008, the balance of payments ran a deficit of $20.4 billion. The RBI’s foreign exchange reserves declined by $57.4 billion during 2008-09, it added.